. Newlin Inc. has a depreciable asset that cost $24,000, has a residual value of $2,000,...
. Newlin Inc. has a depreciable asset that cost $24,000, has a residual value of $2,000, and an expected life of 5 years. The adjusting entry to record one full year’s depreciation on this asset will (ignore taxes):
(a) Increase total liabilities $4,400.
(b) Increase total assets $4,400.
(c) Decrease net income $4,400.
(d) Increase net income $4,400.
(e) None of the above are correct.
Homework Answers
Depreciation for the year = (Cost - Residual value) / Expected useful life
= ($24,000 - $2,000) / 5
= $4,400
This decreases the Net income and total assets by $4,400.
The answer is Option c.
Add Answer to:
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